Bosnia gets IMF euro loan disbursement after obstacles

WASHINGTON, Jan 31 (Reuters) - The International Monetary Fund's board on Friday signed off on its latest review of Bosnia's loan program, and approved a disbursement of 48 million euros ($65 million) for the European nation, which overcame several hurdles to get the money.

The IMF board also agreed to extend Bosnia's program by nine months and add about 154 million euros to the loan in order to help with financing needs expected at the end of the year, the IMF said.

"A challenging domestic situation and the upcoming general elections pose significant risks to the timely implementation of the economic program," Minouche Shafik, IMF deputy managing director, said in a statement.

"An extension and augmentation of the stand-by arrangement from the fund can provide a valuable anchor for economic policies during the election period and the political transition," she added.

The IMF board decision was widely expected after Bosnia overcame two obstacles to getting the badly needed funds, part of its original 385 million euro stand-by loan.

The IMF first postponed its decision on Bosnia's next tranche of aid in December after Bosnia's national parliament failed to pass its 2014 budget on schedule, as required under the loan conditions.

Then, in January, the president of one of Bosnia's autonomous regions, the Bosniak-Croat Federation, sacked his finance minister. The IMF warned it could not approve the next loan tranche without this finance minister's signature.

Bosnia's regional Constitutional Court finally agreed to let the finance minister carry out his duties pending a final ruling on the legality of his sacking.

"Commendable progress continued to be made under Bosnia and Herzegovina's stand-by arrangement despite heightened political uncertainty," Shafik said. "Economic activity is picking up, benefiting from stronger external demand and prudent macroeconomic policies."

She called on the country to improve its tax collection and administration, make the public sector more efficient, advance privatization, and improve the business environment.